May 22 (Bloomberg) -- Hong Kong stocks fell for a second
day after a storm shut the city’s markets this morning. Power
producers declined, while China Galaxy Securities Co. surged in
its debut.

Huaneng Power International Co., a unit of China’s largest
electricity producer, fell 8.3 percent after its rating was cut
by Citigroup Inc. on concern tariffs may fall. Sunny Optical
Technology Group Co., a Chinese maker of lenses and prisms,
dropped 5.4 percent after its equity rating was reduced to
neutral from outperform by Credit Suisse Group AG. China Galaxy,
a brokerage controlled by the country’s sovereign wealth fund,
jumped 6 percent.

The Hang Seng Index slid 0.5 percent to 23,261.08 at the
close, with about three stocks falling for every two that gained
on the 50-member gauge. Volume was 7.3 percent below the 30-day
average. The Hang Seng China Enterprises Index of mainland
companies lost 0.3 percent to 11,053.04. Data tomorrow may show
Chinese manufacturing growth isn’t accelerating.

“China’s economic data will remain modest, and the market
is now adjusting for that,” said Teresa Chow, a fund manager at
RBC Investment (Asia) Ltd., which oversees about $1.1 billion.
“The overall Hong Kong market may be slightly better in the
very near term, but in the medium term we still need to rely on
China macro data.”

The Hang Seng Index, the worst-performing developed-market
equity gauge this year, rose less than 3 percent since the end
of December amid signs China’s economy is slowing. The Standard
& Poor’s 500 Index advanced 17 percent this year, while the
Stoxx Europe 600 Index climbed 11 percent.

Lagging Behind

S&P 500 futures rose 0.2 percent today. The gauge added 0.2
percent yesterday to a record after Federal Reserve Bank of St.
Louis President James Bullard said the central bank should
continue its bond-buying to boost growth.

“So far we have seen a strong U.S. market but Hong Kong
lagged behind,” said Chow. “In terms of valuation, Hong Kong
and China are still attractive compared to other markets.”

Hong Kong’s benchmark index traded at 11.1 times estimated
earnings yesterday, still below its five-year average of 12.6,
according to data compiled by Bloomberg.

The stock exchange canceled morning trading after the Hong
Kong Observatory issued its highest-level rainstorm warning. As
much of 20 centimeters (8 inches) of rain fell on the city.

Huaneng Power dropped 8.3 percent to HK$7.94 after
Citigroup cut its rating to neutral from buy, while Huadian
Power International Co., based in China’s eastern province of
Shandong, slid tumbled 8.7 percent to HK$3.77 after being
reduced to sell from buy. The bank said China may cut wholesale
rates charged by coal-fired power plants.

China Manufacturing

Preliminary China manufacturing figures for May will
probably remain unchanged at 50.4 from a month earlier, analysts
surveyed by Bloomberg said a report from HSBC Holdings Plc and
Markit Economics will show tomorrow. A reading above 50
indicates expansion.

Sunny Optical declined 5.4 percent to HK$10.50 after Credit
Suisse cut its rating on the stock, saying positives are priced
in and investors should take profit.

China Wireless Technologies Ltd., the nation’s second-largest smartphone vendor by market value, dropped 13 percent to
HK$3.29, falling for a third day after reaching a two-year high
last week.

Among stocks that rose, China Galaxy jumped 6 percent to
HK$5.62 from its issue price of HK$5.30.

Futures on the Hang Seng Index declined 0.3 percent to
23,227. The HSI Volatility Index dropped 2.2 percent to 16.32,
indicating traders expect a swing of 4.7 percent for the equity
benchmark in the next 30 days.